What's on Practical Law?
Founder
Practical Law Canada Glossary 6-574-9405 (Approx. 2 pages)
Glossary
Founder
Defined in section 1.1 of National Instrument 45-106 Prospectus Exemptions (NI 45-106) as, in respect of an issuer, a person who:
- Acting alone, in conjunction, or in concert with one or more persons, directly or indirectly, takes the initiative in founding, organizing or substantially reorganizing the business of the issuer.
- At the time of the distribution or trade is actively involved in the business of the issuer.
Section 2.4 of Companion Policy 45-106CP clarifies that a person who takes the initiative in founding, organizing or substantially reorganizing the business of the issuer within the meaning of the definition but subsequently ceases to be actively engaged in the day-to-day operations of the business of the issuer would no longer be a "founder" for the purposes of NI 45-106, regardless of the person's degree of prior involvement with the issuer or the extent of the person's continued ownership interest in the issuer.
For more information, see Practice Notes, Prospectus Offerings in Canada: Overview and Private Placement Offerings in Canada: Overview.
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